March 21:A Swiss Surprise, Micron’s Outlook, Flash PMI Data Ahead
Following Powell's comments yesterday, we'll be watching selling price comments in today's March Flash PMI
US equity futures point to a vibrant market open later this morning. Those futures are being lifted by the market seeing the Fed’s updated economic projections still calling for three rate cuts this year as well as Micron’s (MU) beat and raise earnings report last night. A potential deal to fund the US federal government likely helping give equity futures a boost as is the surprise rate cut by the Swiss National Bank earlier today.
The above points to the market rally continuing into this morning’s open. Whether it continues past that point could hinge on what the March Flash US PMI data reveals about the domestic economy and inflation pressures. While the Fed’s updated economic projections still pencil in three rate cuts this year, during his press conference yesterday, Fed Chair Powell indicated the Fed will need to see more data that confirms inflation is moving sustainably toward the Fed’s 2% target to begin that rate cutting cycle. That means if this morning’s Flash PMI data finds selling prices continued to trend higher in March or were little changed compared to the first two months of the year, we could see very recent upward revisions in June rate cut probabilities fade.
The Swiss National Bank surprised the market with a decision to lower its main policy rate by 0.25 percentage points to 1.5%, saying national inflation is likely to stay below 2% for the foreseeable future. Supporting the move, the bank now sees average inflation reaching 1.4% in 2024, down from its 1.9% estimate in December, and 1.2% for 2025, trimmed from the previous 1.6% estimate.
Micron (MU) shares soared in aftermarket trading following the company’s beat and raise February quarter earnings report. The company delivered EPS of $0.42, significantly ahead of the -$0.25 consensus, on revenue that rocketed higher to $5.82 billion, up ~58% YoY. For the current quarter, Micron sees EPS in the range of $0.38-$0.52, also well ahead of the $0.09 consensus forecast. Revenue is expected to climb sequentially to $6.4-$6.8 billion, outstripping the $6.0 billion market forecast as the company benefits from the “multi-year opportunity enabled by AI."
Model Musings
Artificial Intelligence
“Hippocratic AI announced a collaboration with NVIDIA to develop empathetic AI healthcare agents — powered by the NVIDIA AI platform – enabling super-low-latency conversational interactions… The AI healthcare agents are built on Hippocratic’s safety-focused large language model (LLM), the first designed specifically for healthcare. Health systems, payors, digital health companies, and pharma deploy Hippocratic AI’s healthcare agents to augment their human staff and complete low-risk, non-diagnostic, patient-facing tasks over the phone.” Read more here
Data Privacy & Digital Identity
“Researchers from the CISPA Helmholtz Center for Information Security in Germany have disclosed the details of a new denial-of-service (DoS) attack vector that impacts several widely used UDP-based application protocols and hundreds of thousands of internet-facing systems.” Read more here
Precision Ag & Agri Science
“John Deere is looking to increase American agricultural yields by 50% by 2050 through the use of connectivity technology. “Our population is expected to grow to almost 10 billion by 2050,” Ryan Krogh, global combine business manager at John Deere, said during the company’s opening keynote speech at Satellite 2024.” Read more here
The Strategies Behind Our Thematic Models
Aging of the Population - Capturing the demographic wave of the aging population and the changing demands it brings with it.
Artificial Intelligence – Software, chips, and related companies that facilitate the collection and analysis of large data sets and autonomous generation of solutions given non-machine language prompts.
CHIPs Act – Capturing the reshoring of the US semiconductor industry and the $52.7 billion poised to be spent on semiconductor manufacturing.
Cloud Computing – Companies that provide hardware and services that enhance the cloud computing experience for users, such as co-location, security, and edge computing.
Consumer Inflation Fighters - Companies poised to benefit as consumers stretch the disposable spending dollars they do have.
Core Holdings – Companies that reflect economic activity and are large enough to not get pushed around by day-to-day market trends. Low-beta, large-cap names able to better withstand economic turmoil.
Digital Infrastructure & Connectivity -The buildout and upgrading of our Networks, Data Storage Facilities, and Equipment.
Data Privacy & Digital Identity - Companies providing the tools and services that verify authorized users and safeguard personal data privacy.
EPS Diplomats - Profitable large capitalization companies proven to produce above-average EPS growth and provide investors with the benefit of multiple expansion.
EV Transition - Capturing the transition to EVs and related infrastructure from combustion engine vehicles.
Guilty Pleasure – Companies that produce/provide food and drink products that consumers tend to enjoy regardless of the economic environment and potential long-term health hazards associated with excessive consumption.
Homebuilding & Materials – Ranging from homebuilders to key building product companies that serve the housing market, this model looks to capture the rising demand for housing, one that should benefit as the Fed returns monetary policy to more normalized levels.
Market Hedge Model – This basket of daily reset swap-based broad market inverse ETFs protects in the face of market pullbacks, overbought market technicals, and other drivers of market volatility.
Luxury Buying Boom - Tapping into aspirational buying and affluent buyers amid rising global wealth.
Market Hedge Model – This basket of daily reset swap-based broad market inverse ETFs protects in the face of market pullbacks, overbought market technicals, and other drivers of market volatility.
Nuclear Energy & Uranium – Companies that either build and maintain nuclear power plants or are involved in the production of uranium.
Precision Ag & Agri Science – Companies that look to address shrinking arable land by helping maximize crop yields utilizing technology, science, or both.
Rebuilding America - Turning the focused spending on rebuilding US infrastructure into revenue and profits.
Safety & Security – Targeted exposure to companies that provide goods and services primarily to the Defense and security sectors of the economy.
Space Economy – Companies that focus on the launch and operation of satellite networks.
The strategies behind our Dividend Income Models:
Monthly Dividend Model – Pretty much what the name says – this model invests in companies that pay monthly dividends to shareholders.
ETF Dividend Model – High-yielding ETFs that provide a range of exposures from domestic equities, international equities, emerging market equities, MLPS, and REITs.
ETF Enhanced Dividend Model – A group of high-yielding ETFs that utilize options to enhance yield through collecting option income.
Don’t be a stranger
Thanks for reading and if you have a suggestion for an article or book we should read, or a stream we should catch, email us at info@tematicaresearch.com. The same email works if you want to know more about our thematic and targeted exposure models listed below.